Unwrapping Rappler

The Philippine Securities and Exchange Commission (SEC) revoked Rappler’s certificate of incorporation. Rappler is a Philippine media organization that, in the Philippines, is required to be 100% Filipino-owned and controlled. However, it needs money to continue as a going concern and most of the money are in the hands of foreigners. How now?

It seems that other media organizations found the answer: Philippine Depository Receipts (PDR). I am no expert on this and what I know about them comes from reading two articles, both from the Inquirer. In simple terms, it is a participation in profits. The shareholder allows third parties to purchase a share in the profits earned by his stocks in the media organization. In this manner, the legal requirement on Filipino ownership is not breached because the stocks remain in the name of the shareholder. The investor only gets a part of the earnings (dividends) earned by the stock; so, they could not even participate in the management of the media organization. That’s the theory at least.

What Rappler offered its investors to their PDRs was a bit more than the regular PDR. They actually allowed the PDR investors to have a say if Rappler was ever inclined to amend its Articles of Incorporation or undertake some manner of reorganization. Under the Rappler PDR, you can’t do that unless the PDR investors says its okay to do so. Boom. They’re dead.

According to the SEC, that provision effectively gives the PDR investor a measure of control over the media organization, and if the investor is a foreigner — anyone other than a Filipino — you just violated the legal requirement of 100% Filipino ownership and control. The SEC, therefore, cancelled the PDRs. Makes sense to me.

Here’s where it doesn’t make sense: not happy with just cancelling the PDRs, the SEC went to the max and cancelled Rappler’s certificate of incorporation because it violated the legal requirement to be 100% Filipino. Why did they impose so extreme a penalty as cancelation of its certificate of incorporation? Many suspect the hand of the Government of which Rappler has been critical of. To be fair, Rappler was also critical of the previous administration but the current one, with its controversial war on drugs and cozy relationship with China, has been a far more frequent subject much to their discomfort. People, therefore, see this as payback.

As I noted before, PDRs are not unique to Rappler. Other media organizations like ABS-CBN and GMA have also issued PDRs, and some have been bought by foreign investors. However, the SEC points out that these PDRs do not have the controversial provisions that the Rappler PDRs have. Nevertheless, it was pointed out that PLDT, a telecom company also required by Philippine law to be 100% owned and controlled by Filipinos, also violated the 100% Filipino requirement when it issued its PDRs but they were allowed to rectify their mistake and PLDT still exists today. Why was the SEC then so harsh with Rappler?

The Commissioners of the SEC were appointed by the previous Administration; so, there are those who do not see this as payback. How could it be when these people are Aquino appointees but, in the Philippines, everything is possible and political butterflies thrive in great numbers. Perhaps they do not want to share in the fate of other heads of commissions and government agencies and instrumentalities who were unceremoniously kicked out for one reason or another. In this administration, a “single whiff” of corruption is supposed to be enough to have your head roll (but it also depends on who is doing the sniffing and who is being sniffed at as it appears that friends of the administration usually gets a free pass and just gets shuffled around the vast governmental bureaucracy). Are there skeletons in the SEC closet that could cause them their heads?

Or did the SEC just make an honest mistake when it imposed the ultimate penalty? It said that Rappler can still operate and it does have the right to ask the SEC to reconsider its decision and, failing that, appeal the same all the way to the Supreme Court, which, unfortunately for them, are majority pro-government. This Government in particular; so, good luck with that but at least there’s a chance no matter how slim, and with litigation cases moving at a snail’s pace in Philippine courts, they may even survive this Administration and get a reprieve in the next.

The Inquirer articles on the PDR says in Rappler’s defense that the controversial provision is just a measure of investor protection; however, if that protection also grants them some control over the company, and the investors are foreigners, then that still violates the legal requirement to be 100% Filipino-owned and controlled. The Rappler’s lawyers should have carved that out; and investors are left with the choice of take it or leave it. It should be noted that other Rappler PDRs were not cancelled because there was no control granted to holders of those PDRs.

For now though, some people suspect that there is an attack on the free press with the Government setting its eyes next on the Inquirer. For sure, the Administration has not been happy about the coverage it has been getting from these two but, usually, governments just let it slide. It is after all the hallmark of a healthy democracy to have a free press. With populism so very in these days, however, democracy seems so last century.


The Philippines’ De Facto Martial Law

Once upon a time, there were things we valued like “due process” and the Rule of Law. It was most revered and celebrated right after the Philippines rose from the darkness that was the Marcos era. Former President Marcos had imposed martial law over the country after a sham assassination attempt against the then Defense Secretary, Juan Ponce Enrile. Under martial rule, due process and the Rule of Law were disregarded and people deemed radicals, and the population in general, suffered for it. When the so-called Marcos Regime was finally defeated, a new Constitution was introduced and the Rules of Court revised to protect and preserve the right of the people to due process of law.

Decades later, a new Philippine president who counts the Marcoses as his friends is intent in bringing back the dark days when due process and the Rule of Law were considered nuisances rather than something to be respected and observed.

This president, a former prosecutor at that, has twice publicized the names of people allegedly involved in the illegal drug trade. The first list was composed of former and current police officers. The second, longer, list, contains the names of politicians, judges and others. The president claims that the list was verified and re-verified before he made it public. Interestingly, one of the judges he named appears to have passed away eight (8) years ago. How someone dead figures in the illegal drug trade has yet to be established but it does make you wonder what kind of verification and re-verification was undertaken by those who prepared it.

What’s more interesting though is that he ordered those he named and shamed to report to him (as far as the politicians, mostly mayors, are concerend) and the Supreme Court for the judges to clear their names.

Now, people might say “See, they are being given due process because they can try to prove their innocence! Doesn’t that prove that the president is adhering to the Rule of Law?” Well, no. Hell no!

He claims that he is duty-bound to the people who elected him president to tell the people “what is happening.” It might do well to remind the president that when he took his oath as president of the Republic of the Philippines, he swore to uphold the Constitution and the laws of the land. The Constitution he swore to uphold contains the Bill of Rights where the right to due process, among others, is enshrined. The president is also duty-bound to observe due process and the Rule of Law. When he declares that he is not bound to give anyone due process because he is not a court, he betrays a lack of understanding of one of the most fundamental principles of law. We shudder at the thought.

You see, it all begins with something called presumption of innocence. That means someone is innocent until he is proven guilty. To start an investigation, say a violation of the Comprehensive Dangerous Drugs Act of 2002, a charge has to be made against a person that the accused will then answer. The charge will have to be specific enough for the accused to be able to refute. If the accusation progresses into a criminal complaint, then the matter is brought before a court for trial. There, both the prosecution and the defense present evidence to prove the guilt and innocence, respectively, of the accused. The judge then decides the case based on the law and the evidence presented. If found guilty, then the accused can appeal his case all the way to the Supreme Court. That is what we call due process of law and adherence to the Rule of Law.

What the president has done is do away with the presumption of innocence. Those he named are, to him, involved in the illegal drug trade. They do not have the presumption of innocence in their favor. Instead, like in China, they have to prove their innocence. The people he named and shamed does not even have anything specific to admit or deny. They are simply people involved in the illegal activity. How will they even begin to defend themselves? What exactly are they being accused of? What evidence is there that allegedly shows their participation in the crime? If the Government has something against each and every one of those named by the president, then the evidence should have been taken before a fiscal/prosecutor to determine whether or not there is probable cause to bring a criminal charge against that person. You do not subvert the Rule of Law by doing away with due process by making him answer a general accusation. In all likelihood, those accused would probably incriminate themselves or just plead guilty to get out of it.

It gets worse, whether these people are innocent or guilty, these people will forever have their names connected to the illegal drug trade but it doesn’t end with them. The same fate is now shared by their families. It will be harshest on the children. Those innocent will find it hard to shake off the stigma that will forever stain their lives. To that, the president only says he is responsible. Little comfort to the innocent. That’s where the president’s former position of prosecutor really stings: he should know better. We in the legal profession expect so much more from him because of it, and yet here we are. As the Good Book says, to whom much is given, much is expected. Two months into his administration, he is woefully found wanting. Should we even be surprised considering his record as former mayor of Davao where death squads abound giving us a foreshadowing of things to come? Yes, because, maybe foolishly, we thought he would change his ways and be more presidential when he won the post. With each passing day, he continues to prove us wrong.

Make no mistake, illegal drugs that kill and ruin the lives of thousands if not hundreds of thousands, should be addressed. No one is questioning or challenging that. What is being questioned and challenged is how it is being addressed. A War on Drugs has failed in Mexico, Colombia and the U.S. For all the firepower that has been employed to strike at those involved, the illegal drug trade is still going strong. Instead of a War, other states have opted to treat the problem as a health issue. The solution is controversial but in the countries that have taken such a step, the illegal drug trade isn’t as big a problem, if at all.

By his actions, this president has brought the Philippines back to the days of martial law when no one was presumed innocent; you had no rights; and everything was what the Government, and the president in particular, said it was. That’s exactly where we are right now. His Government sees human rights as something that can destroy the country. He is outraged at the statements of the Human Rights Commission, a body created under the Constitution to protect and uphold human rights. Most of his sorties are to police and military installations where he promises them higher salaries and full support purportedly in the War on Drugs. You don’t have to be a conspiracy theorist to fear the worst.

At least Marcos had the decency to declare martial law. This president just rolled us in it.